The system destroys incoming missiles at altitudes beyond the Earth's atmosphere, making it especially useful in countering missiles that might carry a nuclear warhead.

The Thaad interceptor is produced by the US company Lockheed Martin.

Analysis: Riyadh is hedging its bets

By Sebastian Usher, BBC Arab Affairs analyst

This latest multi-billion-dollar deal will help satisfy the Trump administration's desire to be seen to be protecting and increasing jobs at home.

Donald Trump has also made it abundantly clear that he is completely in tune with the Saudi view of Iran as the biggest threat in the region - which is a key rationale behind this new Saudi spending spree.

He may be less pleased, though about the arms deal the Saudis agreed with Russia during King Salman's visit to Moscow this week.

It showed perhaps how Riyadh is hedging its bets, as US influence has been diminishing in the Middle East.